THE IRISH ECONOMY is set to grow this year and next as inflation is expected to moderate, according to a new report by the ESRI. 

The think tank has predicted that Ireland’s domestic economic activity is to grow by 3.8% in 2023 and by 3.9% in 2024.

In the labour market, the unemployment rate has fallen to a near historical low of 4.3% in February 2023 and the ESRI said it anticipates employment to remain strong throughout this year and next. 

The ESRI said it expects inflation to moderate considerably due to falling energy costs. 

It now anticipates inflation to average 4.5% in 2023 before falling further to 3.5% in the next year. 

The ERSI warned that while inflation is expected to moderate, price levels are going to remain high which is likely to pose cost of living challenges.

“Despite a moderation in inflationary pressures in 2023 relative to 2022, high price levels are likely to present challenges for vulnerable households. Any ongoing cost of lviing measures should therefore be tailored and targeted to groups with the most need,” report author Dr Conor O’Toole said. 

Further downside risks internationally relate to a tightening of financial conditions and a broadening of banking stress as well as any escalation in tensions regarding the Russian invasion of Ukraine, the ESRI said. 

The ESRI anticipates a “significant surplus” in the Government balance in 2023 and 2024 due to the strength of exchequer receipts and corporation tax revenue. 

However, it noted that an increasing concentration of corporatiomn receipts from the pharma and ICT sector leaves the exchequer vulnerable to firm-specific risks.